OVERNIGHT MARKETS AND NEWS

March E-mini S&Ps (ESH16 +0.26%) are up +0.20% as stock index futures track crude oil prices (CLH16 +1.84%) which are up +1.67%. European stocks are down -0.93% at a 1-1/2 week low as losses in Italian banks lead the market lower. The cost of insuring corporate debt in Europe rose as the Markit iTraxx Europe Index of credit-default swaps on investment-grade companies rose above 100 bp, the highest in 2-1/3 years, as the continued decline in energy and commodity prices is putting pressure on miners and energy producers along with the banks that have loaned to those companies. Asian stocks settled lower: Japan -3.15%, Hong Kong -2.34%, China -0.38%, Taiwan -0.84%, Australia -2.33%, Singapore -1.10%, South Korea -0.92%, India -1.29%. Losses in Chinese stocks were limited as property stocks rose after the PBOC cut the minimum required down payment for first-time purchases to the lowest ever in an attempt to prop up the property market.

The dollar index (DXY00 -0.20%) is down -0.26%. EUR/USD (^EURUSD) is down -0.01%. USD/JPY (^USDJPY) is down -0.38%.

Mar T-note prices (ZNH16 -0.12%) are down -2 ticks.

According to people with direct knowledge of the matter, the PBOC plans to loosen rules on when foreign investors can bring money in and out of funds under the Qualified Foreign Institutional Investor scheme (QFII), which grants quotas for money brought into China for investment in domestic stocks and bonds. The lock-up period for the withdrawal of QFII funds from China would be relaxed and institutions will be given more latitude over when they can bring money into China. Under the planned changes, QFII funds would be allowed to withdraw money from China on a daily basis. Currently, funds are subject to lock-ups of either 1 week of 1 month, depending on the type of quota.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous +8.8% with purchase sub-index +4.6% and refi sub-index +11.2%), (2) Jan ADP employment change (expected +193,000, Dec +257,000), (3) final-Jan Markit services PMI (expected unrevised at 53.7, prelim-Jan -0.6 to 53.7), (4) Jan ISM non-manufacturing index (expected -0.7 to 55.1, Dec -0.8 to 55.8).